The next five days may be among the most important in the history of the American auto industry.
Millions of people, including thousands of Delawareans, will be affected by what happens to Chrysler. Will it reach an agreement with its creditors or will it be forced to file for bankruptcy?
The Obama administration reportedly is urging the automaker to file for Chapter 11 protection. President Obama has said the bankruptcy could move quickly through the court and the American automobile industry would be back on its feet in a new, slimmed-down condition.
That's unlikely. It's even more unlikely if General Motors follows Chrysler into bankruptcy, as a number of observers predict.
Both companies have decades of history, an untold number of commitments and obligations, and a host of creditors who most likely will fight for what is theirs. Presidents feel political pressure. Bankruptcy judges don't. The sorting and restructuring of both companies will take time.
The Chrysler company has until Thursday to win significant concessions from its creditors. So far, despite weeks of negotiations, that hasn't happened. If the creditors don't agree to cut what Chrysler owes them and agree to take equity in the company, the Obama administration will push the company into bankruptcy court.
If that happens, Chrysler either emerges or liquidates. Already, according to BusinessWeek magazine, China is eyeing Chrysler's Jeep division.
Current and future retirees would be affected by a liquidation or a bankruptcy. The Federal Government Accountability Office reported on Thursday that the collapse of Chrysler's and GM's pension funds would overwhelm the Pension Benefit Guaranty Corp., which is already strained by the failures of other pension plans.
The Washington Post reported that if the Chrysler pension plan is terminated, it will be $9 billion underfunded. GM's would be $16 billion. Chrysler owes its health fund $10 billion, while GM owes its fund $20 billion.
Younger retirees, especially those who took buyouts, would suffer the most. Their suffering would be felt by local communities, including Delaware.
What happens over the next few days will be important for more than just the auto industry.
